How To Write Covered Calls - An Ongoing Real Case Study! Message Board

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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!

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To: Dnorman who wrote (7634)	6/14/1998 1:18:00 PM
From: Tom K.	Read Replies (1) of 14162

Dennis, the MM are there to ensure there is liquidity in the marketplace. The "bid" is what they will pay you if you want to sell a contract, the "ask" is what they are asking if you want to buy one. The spread between the two is where they make some of their money. If you want to ensure that you receive at least a certain price, submit your trade as a "limit order" at whatever price you want.... the MM's will decide if they want to take it. I often will split the bid-asked price (I believe my broker charges me an additional $5 for a limit order vs. a market order... it's more work for them, but helps me to not get overcharged.) Pay attention to Herm's advice.... you must watch the behavior of the stock and do your trades at the right time.... in addition to picking the right underlying issue (the most important FIRST rule), another key rule is patience. Sell PUT's on weakness and CALL's on strength. Tom

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